Apple to Stop Using GPU Technology From Imagination Technologies Within 2 Years

In a bombshell press release issued Monday, UK chip designer Imagination Technologies said Apple told it that it would end a fruitful deal to use Imagination’s blueprints for customized graphics cores in its own A-series chips powering iPhone, iPad, iPod touch, Apple Watch and Apple TV devices.

 There were rumors that Apple was in 'advanced talks' to acquire Imagination Technologies but based on a recent press release from Imagination Technologies that no longer appears to be a possibility.

In other words, Imagination will not be eligible for future royalty payments under the current license and royalty agreement. “There are no parties with whom the Group has contractual or other arrangements which are essential to the business of the Group except the contract with Apple Inc,” according to Imagination’s 2016 annual report.

Surprisingly, Imagination claims Apple cannot develop bespoke mobile GPUs from scratch without violating its patents, intellectual property and confidential information. The company believe it would be “extremely challenging” to design a brand new GPU architecture from basics without infringing its intellectual property rights.

To replace lost Apple revenues, Imagination will need many design wins at other vendors. However, that would “take time and any near term beat from the Apple supercycle over the next twelve months will be overshadowed by this looming overhang,” Neil Campling, analyst at Northern Trust, told City A.M.
Imagination posted its biggest loss in 2016, £61.5 million (about $77 million) on revenue of £120 million (approximately $150 million) due to weaker smartphone sales. Apple last renewed its contract with Imagination in February 2014.

In addition to developing mobile GPUs that companies like Apple and others license for use in their own system-on-a-chip designs, the UK company is behind Pure digital radios and also creates and licenses processor designs for video processing and communications.


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